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Randgold Resources Limited Message Board

  • investora2z investora2z Aug 22, 2013 6:22 AM Flag

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    Randgold has corrected a bit recently, but remains 28% above the low made in June. This is on back of the 14% rise in price of gold. Most stocks have moved up sharply, and several have crossed important levels. Gold itself is above important levels, and those are expected to provide support in case of a correction. Gold needs to survive negative news flow (whenever it comes) and remain above these levels. That will be an indication of improved sentiments. Overall, the gloom has receded a bit, but the volatility points to the fact that the nervousness remains. Comments from the Fed move the market as if they are saying something which no body ever imagined. Tapering of QE was expected, but some markets are reacting too negatively as if they expected a perpetual flow of liquidity. In case the sentiments improve further, it will be a stock picker's market, and cost of production and leverage / liquidity will be the key metrics to consider. Randgold has reduced the cash costs of production compared to Q1'13. However, compared to H1'12, the costs went up in H1'13. The all in costs are expected to be around $1000 per ounce. The industry average is around $1200, with a few companies like Pershing Gold (PGLC) expected to have much lower costs at $800 per ounce. Further, the debt remains very low, and the company has improved the liquidity by a $200 million revolving credit facility. The valuations are bit high compared to the peers as the price to book and the price to sales ratio are high. Further, the forward P/E ratio is around 17. It is down 22% on a 52 week basis, where many other stocks are down much more. It has exposure in other political environments which makes it relatively risky compared to the companies operating only in North America.

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